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Calvin and Hobbes run a company that sells only two items: T-shirts and car decals. Calvin is fast at making decals and very slow at making T-shirts, whereas Hobbes is fast at making T-shirts and very slow at making decals. Which statements accurately describe the situation?
a. Company output will be maximized if Calvin makes all the decals and Hobbes makes all the chains.
b. Calvin has a comparative advantage for making decals.
c. Hobbes has a higher opportunity cost for making decals than Calvin.
d. Company output will be maximized if Calvin and Hobbes both divide their time equally between making decals and making chains

Respuesta :

Answer:

A

B

C

Explanation:

A person has comparative advantage in production if it produces at a lower opportunity cost when compared to other people.

Opportunity cost of the next best option forgone when one alternative is chosen over other alternatives

A person should specialise in the production of goods for which they have a comparative advantage. this maximises total output

Calvin has a comparative advantage in making decals because he is faster compared to Hobbes. He should specialise in making decals.

Hobbes has a comparative advantage in making shirts because he is faster compared to Calvin. He should specialise in making shirts

chilljain33

The correct statements are that

1. Production output will be maximized if Calvin makes all the decals and Hobbes makes all the t-shirts.

2. Calvin has a comparative advantage for making decals.

3. Hobbes has a higher opportunity cost for making decals than Calvin.

So, the correct options that match the statements quoted above are as given under A, B and C.

Production output

  • Production output of a firm is a quantity that is produced by a firm using the available resources, given that other factors remain constant.

  • Looking at the speeds of production, it is advisable that one makes the products only which they are specialized in and are fast at production.

  • Opportunity cost for Hobbes will be higher than Calvin, as he could have made more t-shirts if he chose the alternative of producing decals in equal amount of time.

  • Calvin has a comparative advantage for making decals, as it has been provided that Calvin has a better speed of making decals and Hobbes is slow at making decals.

Hence, the correct statements are as under A, B and C which hold true about the production output of Calvin and Hobbes for producing t-shirt and decals.

Learn more about production output here:

https://brainly.com/question/18948748

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